Question
Congratulations! You have just won a $40 million lottery and have elected to receive $2 million per year for 20 years. Assume that a 4%
Congratulations! You have just won a $40 million lottery and have elected to receive $2 million per year for 20 years. Assume that a 4% interest rate is used to evaluate the annuity and that you receive each payment at the beginning of the year.
A.) What is the present value of the lottery?
B.) How much interest is earned on the present value to make the $2 million-per-year payment?
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Financial Markets and Institutions
Authors: Jeff Madura
11th Edition
1133947875, 9781305143005, 1305143000, 978-1133947875
